Global demand for natural gas only marginally recovered from the shock caused by the cut in Russian natural gas supply a year earlier

After a 1.5% decline in 2022, marked by the gas supply crisis caused by the Russia-Ukraine war, global natural gas consumption recovered slightly in 2023, with an estimated growth rate of 0.6%. The Russian gas crisis has led to tense market conditions as global LNG supply growth was too limited to compensate for the cut of Russian gas supplies to Europe. However, a number of economic, technological and weather factors eased the market and tempered the pressure on both demand and prices in 2023.  Europe stands out with a very steep decline in demand to its lowest level since 1995. Driven by this steep reduction in natural gas demand and record-high gas storage levels, European gas prices fell considerably while remaining highly volatile. Asian spot LNG prices followed a similar trajectory. The global market experienced a gradual rebalancing throughout 2023 and natural gas storages closed the year at or near the top of the five-year range in all three key regions (North America, Europe and Northeast Asia).

World natural gas demand fell by 1.6% amid unprecedented energy crisis and strong inflation

2022 marked the worst natural gas and energy crisis in history due to the Russian invasion of Ukraine. The war in Ukraine has strongly impacted the global natural gas market because of the predominant role of Russian gas in European energy supply. Russian pipeline gas exports to Europe slumped to the lowest level observed since the mid-1980s, resulting in a loss of 77 bcm, equivalent to 20% of EU gas consumption in 2021, which had to be replaced.  The global gas market was already tight in 2021 and the Russian gas supply crisis has thus further exacerbated the tightening and the volatility of gas markets. Prices of all commodities and energies spiked and the European gas prices in particular showed an exceptional volatility. Countries responded to energy security issues and high gas prices with gas-to-coal switching (Germany, Asia), energy savings and an acceleration of the development of clean energy technologies. Furthermore, the slower economic growth and the explosion in gas prices led to a destruction of industrial gas demand.

Natural gas consumption posted a strong post-lockdowns recovery in 2021

In 2021, global gas demand surged 4.5% and recorded the largest volumetric growth on record, with an annual gain of 173 bcm that more than offset the 2020 2% decline. This strong rebound took place in the context of a faster than expected economic recovery following the lifting of lockdowns and a strong growth of global energy demand. Both economic, geopolitical and weather factors contributed to the growing and unprecedented tightness of the global gas market. They led to an explosion of Asian and European spot prices to historic highs.